FEMA to reimburse City $10.8 million for emergency work performed following Hurricane Katrina

September 05, 2013

NEW ORLEANS, LA – Today, the City of New Orleans announced that a three-judge arbitration panel of the Civilian Board of Contracts Appeals (CBCA) in Washington, DC unanimously ruled that the Federal Emergency Management Agency (FEMA) must reinstate its original award to the City of $10.8 million for salaries paid to police, fire, and emergency medical service personnel for emergency work performed following Hurricane Katrina in 2005. FEMA originally granted these funds to the City in 2006 and then reversed itself in 2009, leaving the City in a position where it would have to cut other vital services in order to pay FEMA back had the judges not decided in the City’s favor.

“As we mark the eighth anniversary of Hurricane Katrina and the failure of the federal levees, it is important to remember the service of the City of New Orleans’ first responders who faced incredibly difficult circumstances in the wake of the devastation,” Mayor Mitch Landrieu said. “This ruling affirms the hard work put in by so many to serve and protect those in need during our darkest hours.”

“In the face of incredible adversity after Hurricane Katrina, New Orleans’ first responders went above and beyond the call of duty to help and protect people in need,” United States Senator Mary Landrieu said. “This is a common sense decision to reinstate FEMA funding to the City of New Orleans to pay for emergency measures during this time - this is why I believed it was so important to create this arbitration panel. I am grateful to the panel for doing the right thing and to our first responders for their service, both after Katrina and every day.”

The City’s filed action in June 2012 after FEMA retroactively determined that funding previously approved to cover the costs at issue would be taken away from the City pursuant to FEMA’s general policy against reimbursement of regular time salaries of an applicant’s permanent employees. The City maintained that FEMA previously approved the costs as eligible due to the extraordinary nature of this disaster and in recognition of the fiscal crisis that followed, which led the City to lay off nearly half of its non-public safety personnel immediately after Hurricane Katrina. Because restoring order and providing public safety were paramount to New Orleans’ recovery, the City did not lay off first responders despite the lack of local resources to pay for them. FEMA’s choice to cover these costs was both appropriate given the catastrophic nature of Hurricane Katrina and was less costly to federal taxpayers than the expense would have been had we replaced laid-off first responders with private contractors paid for by FEMA.

The arbitration panel agreed with the City’s appeal, finding that “the record demonstrates that the regular pay at issue was an incremental cost incurred by the City in performing emergency work in response to the unprecedented devastation caused by Hurricane Katrina.” The arbitration panel continued, ruling that the “funds were legitimately paid pursuant to an approved agreement, the costs were reasonable, and the purpose of the grant was accomplished.” The arbitration panel ruled that FEMA must compensate the City approximately $10.8 million.

Deputy Mayor and Chief Administrative Officer Andy Kopplin said, “The arbitration panel’s ruling is a big win for the City of New Orleans and restores the common sense decision FEMA made to help us during the deepest depths of our City’s fiscal despair following Hurricane Katrina. It boggles the mind that some in the federal government forgot what it was like here on the ground in the months after the federal levees failed. We are grateful that the arbitration panel reviewed those facts and circumstances and recognized that FEMA had been correct in helping the City in the first place.”

The City’s action was pursuant to regulations promulgated by FEMA in August 2009 as required by federal legislation authored by Senator Mary Landrieu, which established a binding alternative dispute resolution process to expedite recovery efforts within the Gulf Coast Region by resolving outstanding disputes stemming from the aftermath of Hurricanes Katrina and Rita. Pursuant to the Sandy Recovery and Reinvestment Act 2013, a similar process, the Dispute Resolution Pilot Program (DRPP), has been established to govern any disaster declared on or after October 2012.

Attorneys Donna D. Fraiche and Wendy Huff Ellard of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, and Ernest B. Abbott of FEMA Law Associates, PC represented the City of New Orleans in this action.